SIDBI to take fast action against defaulters
The SIDBI (Amendment) Bill, 2012, would streamline procedure for loan recovery and also seek to confer power upon the SIDBI board to specify investment limit for small units
The Small Industries Development Bank of India (SIDBI) will be able to take speedier action against defaulters after Parliament passes a Bill to amend the SIDBI Act, although its business model would remain same and it would continue to finance Micro, Small and Medium Enterprises (MSMEs), a top official was quoted in a PTI report.
Last month, the government introduced SIDBI (Amendment) Bill, 2012, in the Lok Sabha to amend certain sections of the Act under which the bank was set up. The Bill would streamline the procedure for recovery of loans by SIDBI and also seeks to confer power upon its board to specify by unanimous resolution the investment limit for small units. It also enables SIDBI to accept repayment of foreign currency loans in foreign currency and maintain foreign currency loan accounts. The amendment would also empower SIDBI to render financial assistance by way of venture capital, risk capital, factoring and discounting.
Earlier, during the Union Budget, the Finance Minister announced a Rs5,000 crore India Opportunities Venture Fund with SIDBI, in order to enhance availability of equity to the MSMEs.
The official said the new Bill will not result in any change in SIDBI’s business or activities but would empower it and its board of directors to take speedier action against defaulters and dispose off cases through authorisation by the district magistrate or the chief metropolitan magistrate.
SIDBI's domain consists of small scale industrial units, which are defined as those where investment in plant and machinery does not exceed Rs1 crore. In addition, SIDBI’s assistance flows to the transport, healthcare and tourism sectors and also to the professional and self-employed persons setting up small-sized professional ventures.
SIDBI was set up in 1990 as the principal financial institution for the promotion, financing and development of the MSME sector and for co-ordination of the functions of the institutions engaged in similar activities.
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